This also seems to be precisely where neoliberalism – and Friedman himself – went wrong.
22. Stephanie Mudge, “The Social Bases of Austerity. European Tunnel Vision & the Curious Case of the Missing Left,” SPERI Paper No.9 (February 2014). http://speri.dept.shef.ac.uk/wp-content/up-loads/2013/01/SPERI-Paper-No.9-The-Social-Bases-of-Austerity-PDF-579KB.pdf
23. John Maynard Keynes, The General Theory of Employment, Interest and Money (1936), last paragraph.
24. Quoted in: Burgin, The Great Persuasion, p. 217.
25. John Maynard Keynes, General Theory, last paragraph.
Acknowledgments
No book is ever written alone, but never before have I had such a wealth of support. My thanks firstly to the members of The Correspondent, who provided input and tips on articles and books, as well as pointing out various errors. Also to my coworkers who read all or parts of the manuscript – Jesse Frederik, Andreas Jonkers, Erica Moore, Travis Mushett, and Rob Wijnberg – I owe a huge debt of gratitude.

…

In that sense, I’m heartened by our dissatisfaction, because dissatisfaction is a world away from indifference. The widespread nostalgia, the yearning for a past that never really was, suggests that we still have ideals, even if we have buried them alive.
True progress begins with something no knowledge economy can produce: wisdom about what it means to live well. We have to do what great thinkers like John Stuart Mill, Bertrand Russell, and John Maynard Keynes were already advocating 100 years ago: to “value ends above means and prefer the good to the useful.”31 We have to direct our minds to the future. To stop consuming our own discontent through polls and the relentlessly bad-news media. To consider alternatives and form new collectives. To transcend this confining zeitgeist and recognize our shared idealism.
Maybe then we’ll also be able to again look beyond ourselves and out at the world.

A joint investigation by broadcaster NBC and the Center for Investigative Reporting found that firms abuse the program by bringing in technology graduates when there is no firm job and keeping them like slaves, hostaged until they find work. When working, they cannot change jobs, as employers can levy a punitive fee.
China frequently uses workers from home on foreign projects, to take advantage of lower costs and avoid the employment conditions of the host country. Conflicts, sometimes violent, with the local workforce are common.
Workers, irrespective of profession and skill, now face what John Maynard Keynes termed technological unemployment. The process was championed as reducing low-skilled monotonous jobs and increasing employment mobility, as well as providing greater employment and lifestyle choices. Economists lauded the new knowledge/bioengineered/clean and green (delete as required) economy. The displaced workers would become highly educated and skilled, finding new, intellectually challenging and highly paid jobs.

Rajan, Fault Lines: How Hidden Fractures Still Threaten the World Economy, Princeton University Press, 2010.
David Roche and Bob McKee, New Monetarism: New Edition, An Independent Strategy Publication, 2008.
——, Democrisis: Democracy Caused the Debt Crisis. Will It Survive It? An Independent Strategy Publication, 2012.
Robert Skidelsky, John Maynard Keynes 1883–1946: Economist, Philosopher, Statesman, Penguin, 2003.
Benn Steil, The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order, Princeton University Press, 2013.
David Wessel, In Fed We Trust: Ben Bernanke's War on the Great Panic, Scribe Publications, 2010.
Martin Wolf, The Shifts and the Shocks: What We've Learned—and Have Still to Learn—from the Financial Crisis, Penguin, 2014.
Daniel Yergin and Joseph Stanislaw, The Commanding Heights: The Battle for the World Economy, Touchstone Books, 2002.

He described unemployment as something close to a mirage: “the army of the unemployed is no more unemployed than are firemen who wait in fire-houses for the alarm to sound, or the reserve police force ready to meet the next call.”14 The creative forces of capitalism, in short, required a supply of ready labor, which came from people displaced by previous instances of technological progress.
John Maynard Keynes was less confident that things would always work out so well for workers. His 1930 essay “Economic Possibilities for our Grandchildren,” while mostly optimistic, nicely articulated the position of the second camp—that automation could in fact put people out of work permanently, especially if more and more things kept getting automated. His essay looked past the immediate hard times of the Great Depression and offered a prediction: “We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment. This means unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor.”15 The extended joblessness of the Great Depression seemed to confirm Keynes’s ideas, but it eventually eased.

…

Because of these and other factors, we often hear from business leaders something very close to what Eric Spiegel, the CEO of Siemens USA, said in an interview: “The U.S. is a great place for manufacturing these days. We’re making things here in the U.S. that we’re shipping over to China. . . . We just need to make sure that we’ve . . . got the infrastructure in place to be able to handle the increased work.”25
There’s an interesting historical wrinkle in discussions about infrastructure investment. The legendary economist John Maynard Keynes, whose name is attached to a school of thought that advocates stimulus spending, famously suggested in 1936 that during recessions the government should put money in bottles, bury the bottles deep in old coal mines, then sell the rights to dig them up.26 Doing so, he argued only partly in jest, would “be better than nothing” because it would create demand during periods when labor and capital would otherwise go unused.

contestants are shown answers and must ask questions that would yield these answers.
Chapter 3. Creative Destruction: The Economics of Accelerating Technology and Disappearing Jobs
We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.
—John Maynard Keynes, 1930
The individual technologies and the broader technological acceleration discussed in Chapter 2 are creating enormous value. There is no question that they increase productivity, and thus our collective wealth. But at the same time, the computer, like all general purpose technologies, requires parallel innovation in business models, organizational processes structures, institutions, and skills.

…

“In the years ahead,” Rifkin wrote, “more sophisticated software technologies are going to bring civilization ever closer to a near-workerless world. … Today, all … sectors of the economy … are experiencing technological displacement, forcing millions onto the unemployment roles.” Coping with this displacement, he wrote, was “likely to be the single most pressing social issue of the coming century.”
The end-of-work argument has been made by, among many others, economist John Maynard Keynes, management theorist Peter Drucker, and Nobel Prize winner Wassily Leontief, who stated in 1983 that “the role of humans as the most important factor of production is bound to diminish in the same way that the role of horses in agricultural production was first diminished and then eliminated by the introduction of tractors.” In his 2009 book The Lights in the Tunnel, software executive Martin Ford agreed, stating that “at some point in the future—it might be many years or decades from now—machines will be able to do the jobs of a large percentage of the ‘average’ people in our population, and these people will not be able to find new jobs.”

…

If wages can freely adjust, then the losers keep their jobs in exchange for accepting ever-lower compensation as technology continues to improve. But there’s a limit to this adjustment. Shortly after the Luddites began smashing the machinery that they thought threatened their jobs, the economist David Ricardo, who initially thought that advances in technology would benefit all, developed an abstract model that showed the possibility of technological unemployment. The basic idea was that at some point, the equilibrium wages for workers might fall below the level needed for subsistence. A rational human would see no point in taking a job at a wage that low, so the worker would go unemployed and the work would be done by a machine instead.
Of course, this was only an abstract model. But in his book A Farewell to Alms, A Farewell to Alms, economist Gregory Clark gives an eerie real-world example of this phenomenon in action:
There was a type of employee at the beginning of the Industrial Revolution whose job and livelihood largely vanished in the early twentieth century.

Productivity Growth Versus Compensation Growth
SOURCE: US Bureau of Labor Statistics.14
A Bear Market for Labor’s Share, and a Raging Bull for Corporations
Early in the twentieth century, the British economist and statistician Arthur Bowley delved into decades of national income data for the United Kingdom and showed that the fraction of national income going to labor and capital respectively remained relatively constant, at least over long periods. This apparently fixed relationship ultimately became an accepted economic principle known as “Bowley’s Law.” John Maynard Keynes, perhaps the most famous economist of all time, would later say that Bowley’s Law was “one of the most surprising, yet best established facts in the whole range of economic statistics.”17
As Figure 2.3 shows, during the postwar period, the share of US national income going to labor moved in a fairly tight range, just as Bowley’s Law would have predicted. From the mid-1970s on, however, Bowley’s Law began to fall apart as labor’s share went first into a gradual decline and then into a seeming free fall just after the turn of the century.

…

More important was the profession’s blindness to the very possibility of catastrophic failures in a market economy.”15
I think there are good reasons to be concerned about a similar failure of the economists’ mathematical models as the exponential advance of information technology increasingly disrupts the economy. Adding to the problem is that many of these models employ simplistic—and in some cases seemingly absurd—assumptions about the way consumers, workers, and businesses behave and interact. John Maynard Keynes may have said it best, writing nearly eighty years ago in The General Theory of Employment, Interest and Money, the book that arguably founded economics as a modern field of study: “Too large a proportion of recent ‘mathematical’ economics are merely concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols.”16
Complexity, Feedback Effects, Consumer Behavior, and “Where Is That Soaring Productivity?”

In the professions, though, our general view is that this (often nostalgic) preference for the old ways of working will be too high a price to pay, especially if the quality of service is demonstrably lower than that provided by a machine.
7.3. Technological unemployment?
In 1930, speculating about ‘the economic possibilities for our grandchildren’, John Maynard Keynes introduced the concept of ‘technological unemployment’.23 The basic idea is simple—that new technologies might put people out of work. The question to which we now turn is whether there will be technological unemployment in the professions in the very long term. The short answer is, ‘there will’. We can find no economic law that will somehow secure employment for professionals in the face of increasingly capable machines.24 However, it is uncertain how extensive the job-loss will be. In this and the following section we explain why there is uncertainty here, and we provide a new framework for thinking in a systematic way about technological unemployment in the professions.

Only when, in addition to just institutions, the increase of mankind shall be under the deliberate guidance of judicious foresight, can the conquests made from the powers of nature by the intellect and energy of scientific discoverers become the common property of the species, and the means of improving and elevating the universal lot.
John Stuart Mill
The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.
John Maynard Keynes
Contents
List of Boxes and Figure
Introduction
PART I. CHANGE
1. The Grand Bargain
1.1 Everyday conceptions
1.2 The scope of the professions
1.3 Historical context
1.4 The bargain explained
1.5 Theories of the professions
1.6 Four central questions
1.7 Disconcerting problems
1.8 A new mindset
1.9 Some common biases
2. From the Vanguard
2.1 Health
2.2 Education
2.3 Divinity
2.4 Law
2.5 Journalism
2.6 Management consulting
2.7 Tax and audit
2.8 Architecture
3.

Transitional Economy
Average Income
Value
Consumers and
Workers
Decoupled
Machines Getting
Better
Machines Becoming
Autonomous
Time
Copyrighted Material – Paperback/Kindle available @ Amazon
Transition / 189
Keynesian Grandchildren
While few contemporary economists seem particularly
concerned about the seemingly inevitable transition to an
automated economy, one legendary economist did have
remarkable insight into the future. In 1930, as the world
plunged into the Great Depression, John Maynard Keynes
wrote an essay entitled “Economic Possibilities for our
Grandchildren.”53 In his essay, Keynes coined the term
“technological unemployment,” writing:
We are being inflicted with a new disease of which some
readers many not yet have heard the name, but of which
they will hear a great deal in the years to come—namely,
technological unemployment. This means unemployment due to
our discovery of means of economising the use of labour
outrunning the pace at which we can find new uses for labour.*
Keynes recognized that, in 1930, technological unemployment would be a temporary phenomenon and that the
economy would eventually absorb the excess workers. The
main thrust of his essay was to attempt to look much furToday, when economists discuss the causes of the Great Depression,
they tend to focus almost exclusively on the monetary policy of the
Federal Reserve.

Library of Congress Cataloging-in-Publication Data
Ford, Martin R.
The Lights in the Tunnel: Automation, Accelerating Technology and
the Economy of the Future / Martin Ford
p. cm.
Includes bibliographical references
ISBN-10 1-4486-5981-7
ISBN-13 978-1-4486-5981-4
1. Economics—Future Trends 2. Economics—Impact of Advanced
Technology on 3. Artificial Intelligence and Robotics 4. Computer
Technology and Civilization 5. Technological Unemployment I. Title
This book is available for purchase or download in
paper and electronic formats at:
www.TheLightsintheTunnel.com
Paperback and Kindle versions are also available at
Amazon.com.
Copyrighted Material – Paperback/Kindle available @ Amazon
Copyright / License Notice
This eBook is copyrighted material. However, it may be
freely downloaded, redistributed and shared with others (feel free to email the PDF file directly to others or
upload it), subject to the following restrictions:
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The PDF file may not be modified or reformatted
in any way, or converted to other formats.

We need, however, to also recognize and manage the negative impacts it can have, particularly with regard to inequality, employment and labour markets.
3.1.2 Employment
Despite the potential positive impact of technology on economic growth, it is nonetheless essential to address its possible negative impact, at least in the short term, on the labour market. Fears about the impact of technology on jobs are not new. In 1931, the economist John Maynard Keynes famously warned about widespread technological unemployment “due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour”.22 This proved to be wrong but what if this time it were true? Over the past few years, the debate has been reignited by evidence of computers substituting for a number of jobs, most notably bookkeepers, cashiers and telephone operators.

…

http://www.frbsf.org/economic-research/publications/economic-letter/2015/february/economic-growth-information-technology-factor-productivity/
21 The economist Brad DeLong makes this point in: J. Bradford DeLong, “Making Do With More”, Project Syndicate, 26 February 2015.
http://www.project-syndicate.org/commentary/abundance-without-living-standards-growth-by-j--bradford-delong-2015-02
22 John Maynard Keynes, “Economic Possibilities for our Grandchildren” in Essays in Persuasion, Harcourt Brace, 1931.
23 Carl Benedikt Frey and Michael Osborne, “The Future of Employment: How Susceptible Are Jobs to Computerisation?”, Oxford Martin School, Programme on the Impacts of Future Technology, University of Oxford, 17 September 2013. http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf
24 Shelley Podolny, “If an Algorithm Wrote This, How Would You Even Know?”

…

But the key here is the timing and extent to which the capitalization effect supersedes the destruction effect, and how quickly the substitution will take.
There are roughly two opposing camps when it comes to the impact of emerging technologies on the labour market: those who believe in a happy ending – in which workers displaced by technology will find new jobs, and where technology will unleash a new era of prosperity; and those who believe it will lead to a progressive social and political Armageddon by creating technological unemployment on a massive scale. History shows that the outcome is likely to be somewhere in the middle. The question is: What should we do to foster more positive outcomes and help those caught in the transition?
It has always been the case that technological innovation destroys some jobs, which it replaces in turn with new ones in a different activity and possibly in another place. Take agriculture as an example.

pages: 504words: 126,835

The Innovation Illusion: How So Little Is Created by So Many Working So Hard
by
Fredrik Erixon,
Bjorn Weigel

And the same conclusion largely holds for knowledge. The basic plot, if you will allow a simplification, in much of the intellectual history of the world centers around the battle between new discoveries and old dogma, and the former tends to win over the latter – not immediately, not in the short run, perhaps not even in the medium term, but in the long run new discoveries often do win.
However, in the long run, as John Maynard Keynes noted, we are all dead. Political romanticism better suits a historian of ideas than a scholar of contemporary politics and economics. The judgment about the Danes in 1066 and All That, the humorous version of English history, does not apply to economic policy: you cannot be both “right and very romantic.”14 Innovation delayed is innovation denied. When opportunities to change markets with the help of a particular innovation are barred, they may not return as new opportunities in the future.

…

Political leaders worried that with the seemingly unlimited productive capabilities of the new machines being developed, there would not be the same amount of demand for labor in the future. Richard Bellman, mathematician and father of dynamic programming, concluded in 1964 that technological advances thus far implied that it would take only 2 percent of the working population to produce what was needed for the American population. The British economist John Maynard Keynes had previously expressed a similar sentiment, arguing that technological development would result in an abundance of leisure time as Westerners would only have to work 15 hours a week.8 Bellman went much further and predicted that his 2 percent scenario would happen within 25 years from the time of writing, and would be more likely to occur within 10 years.9 Futurist Herman Kahn – the founder of the Hudson Institute, and famous for inspiring Kubrick’s character of Dr.

Many, though not all, of the old guard in the commercial arena can’t imagine how economic life would proceed in a world where most goods and services are nearly free, profit is defunct, property is meaningless, and the market is superfluous. What then?
Some are just beginning to ask that question. They might find some solace in the fact that several of the great architects of modern economic thinking glimpsed the problem long ago. John Maynard Keynes, Robert Heilbroner, and Wassily Leontief, to name a few, pondered the critical contradiction that drove capitalism forward. They wondered whether, in the distant future, new technologies might so boost productivity and lower prices as to create the coming state of affairs.
Oskar Lange, a University of Chicago professor of the early twentieth century, captured a sense of the conundrum underlying a mature capitalism in which the search for new technological innovations to advance productivity and cheapen prices put the system at war with itself.

…

That, I think, would be terrible.47
Gandhi understood that mass production was designed to use more sophisticated machines to produce more goods with less labor and at a cheaper cost. He saw, however, an inherent contradiction in the organizational logic of mass production that limited its promise. Gandhi reasoned that “if all countries adopted the system of mass production, there would not be a big enough market for their products. Mass production must then come to a stop.”48 Like Karl Marx, John Maynard Keynes, Wassily Leontief, Robert Heilbroner, and other distinguished economists, he argued that the capitalists’ desire for efficiency and productivity would result in an unyielding drive to replace human labor with automation, leaving more and more people unemployed and without sufficient purchasing power to buy the products being produced.
Gandhi’s alternative proposal was local production by the masses in their own homes and neighborhoods—what he called Swadeshi.

…

But this aside, the Johns Hopkins study of 42 countries revealed that contrary to the view of many economists, approximately 50 percent of the aggregate revenue of the nonprofit sector operating on the Commons already comes from fees for services, while government support accounts for only 36 percent of the revenues, and private philanthropy for only 14 percent.43
I expect that by midcentury, if not much sooner, a majority of the employed around the world will be in the nonprofit sector on the Collaborative Commons, busily engaged in advancing the social economy, and purchasing at least some of their goods and services in the conventional marketplace. The traditional capitalist economy will be managed by intelligent technology attended by small professional and technical workforces.
John Maynard Keynes’s futurist essay, written more than 80 years ago for his grandchildren and alluded to in chapter 1, envisioned a world where machines have freed up human beings from toil in the marketplace to engage in deep cultural play on the Commons in the pursuit of more lofty and transcendent goals. It might prove to be his most accurate economic forecast.
The business at hand will be to provide both retraining for the existing workforce and the appropriate skill development for students coming into the labor market to ease the transition into the new job categories and business opportunities that come with a massive build-out of an Internet of Things infrastructure around the world.

The uncontrolled acceleration of progress, its author wrote, had left society chronically unprepared to deal with the consequences.19
But the Depression did not entirely extinguish the Wildean dream of a machine paradise. In some ways, it rendered the utopian vision of progress more vivid, more necessary. The more we saw machines as our foes, the more we yearned for them to be our friends. “We are being afflicted,” wrote the great British economist John Maynard Keynes in 1930, “with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment.” The ability of machines to take over jobs had outpaced the economy’s ability to create valuable new work for people to do. But the problem, Keynes assured his readers, was merely a symptom of “a temporary phase of maladjustment.” Growth and prosperity would return. Per-capita income would rise. And soon, thanks to the ingenuity and efficiency of our mechanical slaves, we wouldn’t have to worry about jobs at all.

…

Levasseur, “The Concentration of Industry, and Machinery in the United States,” Publications of the American Academy of Political and Social Science, no. 193 (1897): 178–197.
16.Oscar Wilde, “The Soul of Man under Socialism,” in The Collected Works of Oscar Wilde (Ware, U.K.: Wordsworth Editions, 2007), 1051.
17.Quoted in Amy Sue Bix, Inventing Ourselves out of Jobs? America’s Debate over Technological Unemployment, 1929–1981 (Baltimore: Johns Hopkins University Press, 2000), 117–118.
18.Ibid., 50.
19.Ibid., 55.
20.John Maynard Keynes, “Economic Possibilities for Our Grandchildren,” in Essays in Persuasion (New York: W. W. Norton, 1963), 358–373.
21.John F. Kennedy, “Remarks at the Wheeling Stadium,” in John F. Kennedy: Containing the Public Messages, Speeches, and Statements of the President (Washington, D.C.: U.S. Government Printing Office, 1962), 721.
22.Stanley Aronowitz and William DiFazio, The Jobless Future: Sci-Tech and the Dogma of Work (Minneapolis: University of Minnesota Press, 1994), 14.

…

Although Brynjolfsson and McAfee were anything but technophobes—they remained “hugely optimistic” about the ability of computers and robots to boost productivity and improve people’s lives over the long run—they made a strong case that technological unemployment was real, that it had become pervasive, and that it would likely get much worse. Human beings, they warned, were losing the race against the machine.24
Their ebook was like a match thrown onto a dry field. It sparked a vigorous and sometimes caustic debate among economists, a debate that soon drew the attention of journalists. The phrase “technological unemployment,” which had faded from use after the Great Depression, took a new grip on the public mind. At the start of 2013, the TV news program 60 Minutes ran a segment, called “March of the Machines,” that examined how businesses were using new technologies in place of workers at warehouses, hospitals, law firms, and manufacturing plants.

Rather than settling for marginal improvements in battery life and computer power, the left should mobilise dreams of decarbonising the economy, space travel, robot economies – all the traditional touchstones of science fiction – in order to prepare for a day beyond capitalism. Neoliberalism, as secure as it may seem today, contains no guarantee of future survival. Like every social system we have ever known, it will not last forever. Our task now is to invent what happens next.
Notes
INTRODUCTION
1.John Maynard Keynes, ‘Economic Possibilities for Our Grandchildren’, in Essays in Persuasion (New York: W. W. Norton & Co., 1963); George Young, The Russian Cosmists: The Esoteric Futurism of Nikolai Fedorov and His Followers (Oxford: Oxford University Press, 2012); Mark Dery, ‘Black to the Future: Interviews with Samuel R. Delany, Greg Tate, and Tricia Rose’, in Mark Dery, ed., Flame Wars: The Discourse of Cyberculture (Durham, NC: Duke University Press, 1994); Shulamith Firestone, The Dialectic of Sex: The Case for Feminist Revolution (New York: Morrow, 1970).
2.For exemplars of this stance, see Franco Berardi, After the Future (Edinburgh: AK Press, 2011); T.

In a third situation, labour-saving technologies can be of such general use that they diffuse across the entire economy, dampening the overall demand for labour.24 In this circumstance, even if new industries are created, they will require increasingly less labour because these technologies have a wide range of applicability.25 If any of the above conditions hold, then technological change can lead to increased unemployment. As we will see, there are good reasons to believe a number of these conditions do hold. But while technological unemployment is the most prominent reason today for swelling surplus populations, it is not the only one.
Another mechanism that actively changes the size of the surplus is one we have already noted: primitive accumulation.26 This is not just an origin story of capitalism, but also an ongoing process that involves the transformation of pre-capitalist subsistence economies into capitalist economies.

They were slicing up the mortgages and gluing them back together into structured products called “Residential Mortgage-Backed Securities”—RMBS in the jargon—that they sold to other financial institutions, who often had no idea of what they contained. By 2007 the mortgage-backed securities market was worth $6.9 trillion, from $3 trillion in 2000. This euphoria had little to do with hard-nosed analysis of the “real” value of homes.
Some eighty years ago the great British economist John Maynard Keynes provided a subtle explanation of how investors can take prices badly astray. In his book The General Theory of Employment, Interest and Money, Keynes compared picking stocks to a reverse beauty contest in which investors didn’t have to choose the most beautiful face but the face that was most popular among other investors. “It is not a case of choosing those [faces] which, to the best of one’s judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest,” Keynes wrote.

…

“The South-Sea Project” is in The Poems of Jonathan Swift, Vol. 1 (London: William Ernst Browning, 1910), pp. 198-207. The description of new high-tech mortgages and the boom of mortgage-backed securities is in Jane Dokko, Brian Doyle, Michael Kiley, Jinill Kim, Shane Sherlund, Jae Sim, and Skander Van den Heuvel, “Monetary Policy and the Housing Bubble,” Federal Reserve Board, Finance and Economics Discussion Series, December 22, 2009. Keynes’s description of the reverse beauty contest is in John Maynard Keynes, The General Theory of Employment, Interest and Money (New Delhi: Atlantic Publishers, 2006), p. 140. Charles Prince’s view of dancing is reported in Michiyo Nakamoto and David Wighton, “Citigroup Chief Stays Bullish on Buy-outs,” Financial Times, July 9, 2007.
233-236 Should We Pop Them?: Discussion of the potential social, economic, and political fallout from the financial crisis of 2008 draws from Fernando Ferreira, Joseph Gyourko, and Joseph Tracy, “Housing Busts and Household Mobility,” NBER Working Paper, September 2008; Philip Oreopoulos, Till von Wachter, and Andrew Heisz, “The Short- and Long-Term Career Effects of Graduating in a Recession: Hysteresis and Heterogeneity in the Market for College Graduates,” NBER Working Paper, April 2006; and Markus Brückner and Hans Grüner, “Economic Growth and the Rise of Political Extremism: Theory and Evidence,” CEPR Discussion Paper, March 2010.

…

Lansing, “Speculative Growth, Overreaction, and the Welfare Cost of Technology-Driven Bubbles,” Federal Reserve Bank of San Francisco Working Paper, August 2009 (www.frbsf.org/publications/economics/papers/2008/wp08-08bk.pdf, accessed 08/08/2010); and James Edward Meeker, The Work of the Stock Exchange (New York: The Ronald Press Company, 1922), p. 419. The tally of countries that have escaped banking crises is by Carmen Reinhart and Kenneth Rogoff, “Banking Crises: An Equal Opportunity Menace,” NBER Working Paper, December 2008.
236-239 What Rationality?: Eugene Fama’s quote is in Douglas Clement, “Interview with Eugene Fama,” The Region, Federal Reserve Bank of Minnesota, December 2007. Keynes’s quote is in John Maynard Keynes, The General Theory of Employment, Interest and Money (New York: Harcourt Brace and World, 1965), p. 161. Robert Shiller’s theory is described in George Akerlof and Robert Shiller, Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism (Princeton: Princeton University Press, 2010).
240-246 Economics for a New World: Limits to the assumption of human rationality and self-regard are discussed in Herbert Gintis, “Five Principles for the Unification of the Behavioral Sciences,” Working Paper, May 13, 2008.

Other Depression-era job creation programs included the Civilian Conservation Corps, a program for young men focused on planting trees and building parks.
It’s important to be clear that the Depression was the result of a massive failure of the financial system and not due to the automation of work that was proceeding apace in the nation’s factories. Still, the potential threat to jobs that automation also posed had certainly been noted. John Maynard Keynes, most famously, diagnosed in his 1930 essay “Economic Possibilities for Our Grandchildren” what he called a “new disease” in the world’s largest economies. He called it “technological unemployment” and explained that it was “due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor.” And a clever YouTube video, “No Humans Need Apply,” points out that it wouldn’t be that difficult for automation to lead to the same levels of unemployment—about 25 percent in the United States—found in the Depression.

…

But when the intent is to augment human capabilities, any kind of digital intelligence can be put to the task. Working in partnership with a machine can let you be you, only better. And it can let you keep your job, while making it a better one.
Whatever Happened to the Fifteen-Hour Workweek?
If you were reading this book half a century ago, you might be very surprised to find us referring to augmentation as something that would help you retain your work, not be rid of it. In 1928, John Maynard Keynes penned an essay he titled “Economic Prospects for Our Grandchildren,” which argued that decades of productivity and technology improvements would leave those progeny with a new kind of problem: figuring out what to do with their vast leisure time. He wrote: “For the first time since his creation man will be faced with his real, his permanent problem—how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won.”9
Keynes expected that by now we’d all be working about fifteen hours per week.

Despite Wiener’s early efforts to play a technological Paul Revere, after the automation debates of the 1950s and 1960s tailed off, fears of unemployment caused by technology would vanish from the public consciousness until sometime around 2011. Mainstream economists generally agreed on what they described as the “Luddite fallacy.” As early as 1930, John Maynard Keynes had articulated the general view on the broad impact of new technology: “We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment. This means unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor. But this is only a temporary phase of maladjustment.”21
Keynes was early to point out that technology was a powerful generator of new categories of employment.

A 2014 working paper released by the National Bureau of Economic Research confirmed the trend, and yet Henry Siu, an associate professor at the University of British Columbia and one of the authors of the report, clung to the conventional Keynesian view on technological unemployment. He explained: “Over the very long run, technological progress is good for everybody, but over shorter time horizons, it’s not that everybody’s a winner.”1 It is probably worth noting that Keynes also pointed out that in the long run, we are all dead.
Indeed, Keynes’s actuarial logic is impeccable, but his economic logic is now under assault. There is an emerging perspective among technologists and some economists that Keynesian assumptions about technological unemployment—that individual jobs are lost but the overall amount of work stays constant—no longer hold true. AI systems that can move, see, touch, and reason are fundamentally altering the equation for human job creation.

As we saw in chapter 1, the word “computer” originally meant a person who does calculations, but the days when offices were filled with battalions of young (usually male) human computers are long gone. The humble PC has also removed the need for legions of (usually female) secretaries.
The fear that automation would lead to mass unemployment is not new. In 1930, the British economist John Maynard Keynes wrote “We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come – namely technological unemployment. This means unemployment due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.” (19) Decades later, in the late 1970s, a powerful BBC Horizon documentary called Now the Chips are Down alerted a new generation to the idea (and showcased some truly appalling ties.) (20)
Up to now the replacement of humans by machines has been a gradual process.

…

Dan Goodman, lecturer, Intelligent Systems and Networks Group, Imperial College
In Surviving AI, Calum Chace provides a marvellously accessible guide to the swirls of controversy that surround discussion of what is likely to be the single most important event in human history – the emergence of artificial superintelligence. Throughout, Surviving AI remains clear and jargon-free, enabling newcomers to the subject to understand why many of today’s most prominent thinkers have felt compelled to speak out publicly about it.
David Wood, chair, London Futurists
Artificial intelligence is the most important technology of our era. Technological unemployment could force us to adopt an entirely new economic structure, and the creation of superintelligence would be the biggest event in human history. Surviving AI is a first-class introduction to all of this.
Brad Feld, co-founder Techstars
The promises and perils of machine superintelligence are much debated nowadays. But between the complex and sometimes esoteric writings of AI theorists and academics like Nick Bostrom, and the popular-press prognostications of Elon Musk, Bill Gates and Stephen Hawking, there is something of a gap.

…

It wasn’t and couldn’t have been predicted in advance, but in hindsight what could be more logical than our most powerful technology, AI, becoming available to most of us in the form of a communication device?
Thirty years ago we didn’t know how the mobile phone market would develop. Today we don’t know how the digital disruption which is transforming so many industries will evolve over the next thirty years. We don’t know whether technological unemployment will be the result of the automation of jobs by AI, or whether humans will find new jobs in the way we have done since the start of the industrial revolution. What is the equivalent of the smartphone phenomenon for digital disruption and automation? Chances are it will be something different from what most people expect today, but it will look entirely natural and predictable in hindsight.

Say's Law, named after French economist Jean-Baptiste Say, holds that supply creates its own demand, and Say argued that there could not be a “general glut” of any particular goods. Of course we do see gluts in sectors of the economy, but an adherent of Say's Law would argue these are the unintended consequences of interventions in free markets, usually by governments. This law became a major tenet of classical economics, but it was rejected emphatically by British economist John Maynard Keynes, and is not widely accepted today.
But many economists would accept a broader interpretation of the law which states that reducing the cost of a significant product or service will free up money which was previously allocated to it. This money can then be spent to buy more of the item, or other items, thereby raising demand generally, and creating jobs. This assumes, however, that the money freed up is not spent on expensive assets that generate no employment, or invested in companies that employ very few people.

…

For time-starved journalists, “good news is no news” and “if it bleeds it leads”, so the comments of Hawking and the others were widely mis-represented as pure doom-saying, and almost every article about AI carried a picture of the Terminator. AI researchers and others hastened to warn us (rightly) not to throw the baby of AI out with the bathwater of unfriendly superintelligence, and the debate is now more nuanced.
Technological unemployment and the economic singularity
So for me at least, the term “singularity” no longer seems so awkward. And it seems reasonable to apply it to another event which is likely to take place well before the technological singularity. I call this event “the economic singularity”.
There is a lot of talk in the media at the moment about technological unemployment – the process of people becoming unemployed because machines can do any job that they could do, and do it cheaper, faster and better. There is widespread disagreement about whether this is happening already, whether it will happen in the future, and whether it is a good or a bad thing.

…

This disagreement is natural and inevitable: one of the main features of a singularity is that what lies beyond its event horizon is hard to see[v]. Nevertheless we must try to peer into the hazy future if we are to prepare ourselves for it.
In this book I will argue that technological unemployment is not happening yet (or at least, not much), that it will happen in the next few decades, and that it can be a very good thing indeed – if we prepare for it, and manage the transition successfully.
Naturally, there are challenges. As we will see, a lot of people believe that Universal Basic Income (UBI) is a silver bullet that will solve the problem of technological unemployment. UBI is a guaranteed income paid to all citizens simply because they are citizens. It may take some time for the idea of UBI to be accepted, especially in the USA, where resistance to anything that smacks of socialism is often fierce – almost visceral.

Out of this unwillingness, these people have set out to devise technical systems that are more capable than we are ourselves, along any axis or dimension of evaluation you might care to mention: systems that are stronger and faster than we are; that have finer perception and greater endurance; that never, ever succumb to boredom, fatigue or disgust; and that are capable of operating without human oversight or guidance, indefinitely. We are, of course, talking about using robots and automated systems to replace human labor.
The great twentieth-century economist John Maynard Keynes had foreseen much of this early on, coining the expression “technological unemployment” sometime around 1928.1 He saw, with almost clairvoyant perspicacity, that societies might eventually automate away the jobs much of their labor force depended on, and his insight is borne out in recent United States government estimates that an American worker making less than $20 an hour now has an 83 percent chance of losing their job to automation.2 But what Keynes concluded—that the eclipse of human labor by technical systems would necessarily compel a turn toward a full-leisure society—has not come to pass, not even remotely.

Tay had been hijacked by Internet trolls engaged in a long-standing video-game ritual called griefing, in which the trolls compete for attention, as blogger Anil Dash has explained to the New York Times: “Once a target is identified, it becomes a competition to see who can be the most ruthless, and the ones who feel the most powerless will do the most extreme thing just to get noticed and voted up.” Peter Lee, who led the artificial intelligence group at Microsoft Research, vowed to “work toward contributing to an internet that represents the best, not the worst, of humanity.” That might be harder than he thinks.
In 1930 the British economist John Maynard Keynes wrote that in the future we would have to worry about “technological unemployment… due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.” It could be that in the next ten years we will have arrived at the point where Keynes’s prophecy comes true. A 2013 paper by Carl Benedikt Frey and Michael Osborne of Oxford University suggested that 47 percent of US jobs are at high risk of being automated.

…

But the New Yorker writer Tad Friend confronted Andreessen with our present reality: “When I brought up the raft of data suggesting that intra-country inequality is in fact increasing, even as it decreases when averaged across the globe—America’s wealth gap is the widest it’s been since the government began measuring it—Andreessen rerouted the conversation, saying that such gaps were ‘a skills problem,’ and that as robots ate the old, boring jobs humanity should simply retool.”
Characterizing Keynes’s “technological unemployment” as just a “skills problem” seems shortsighted. The notion that a fifty-year-old autoworker replaced by a robot is going to retrain himself as a software coder and apply for work at Google seems to be a pipe dream that only someone as rich and insulated as Marc Andreessen could conceive. But that is not to say that we shouldn’t think about Keynes’s and Andreessen’s vision of a world in which most of us have a lot of leisure time.

.* Having said that, the (neo-)Schumpeterian school may be criticized for focusing overly on technology and innovation and relatively neglecting other economic issues, such as labour, finance and macroeconomics. To be fair, other schools too focus on particular issues, but the Schumpeterian school exhibits a narrower focus than most.
The Keynesian School
One-sentence summary: What is good for individuals may not be good for the whole economy.
Born in the same year as Schumpeter and sharing the honour of having a whole school named after him is John Maynard Keynes (1883–1946). In terms of intellectual influence, there is no comparison between the two. Keynes was arguably the most important economist of the twentieth century. He redefined the subject by inventing the field of macroeconomics – the branch of economics that analyses the whole economy as an entity that is different from the sum total of its parts.
Before Keynes, most people agreed with Adam Smith when he said, ‘What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom.’

…

The trouble is that this process is not instantaneous. It takes time for people to search for new jobs and for companies to find the right people. The result is that some people end up spending some time unemployed in the process. This is known as frictional unemployment.
Some skills are not wanted any more: technological unemployment
Then there is unemployment due to the mismatch between the types of workers demanded and the available workers. This is usually known as technological unemployment or structural unemployment. This is unemployment that we have seen in movies like Roger and Me, the first movie made by Mike Moore, in which he documents the consequence of the closure of a GM car factory in his town, Flint, Michigan, or in The Full Monty, in which six unemployed steel workers in Sheffield, UK, after a draining period of unemployment, launch themselves as a male stripper group.

…

According to standard economic theory, these workers could have acquired skills in ‘sunrise’ industries and moved to other areas – the electronics industry in California and investment banking in London would have been, respectively, the obvious alternatives. In reality, smooth transitions almost never happen, if you leave things to the market alone. Even with systematic government subsidies and institutional supports for retraining and relocation (e.g., a bridging loan to buy a house where the new job is before the current one is sold), as used in the Scandinavian countries, it is a struggle to eliminate technological unemployment.
Governments and unions create unemployment: political unemployment
Believing in the modern version of Say’s Law, many Neoclassical economists have argued that, except in the short run, the law of supply and demand ensures that everyone who wants to work will find a job at the going wage rates. If some people are unemployed, these economists argue, it is because something – the government or trade unions – is preventing them from accepting the wage rates that will clear the market.

Trapped by an ever-worsening depression, many
companies continued to cut costs by substituting machines for
workers, hoping to boost productivity-only to add fuel to the fire.
At the depth of the depression, the British economist John Maynard Keynes published The General Theory of Employment, Interest
and Money, which was to fundamentally alter the way governments
regulate economic policy. In a prescient passage, he warned his readers of a new and dangerous phenomenon whose impact in the years
ahead was likely to be profound: "We are being afflicted with a new
disease of which some readers may not yet have heard the name, but of
which they will hear a great deal in the years to come-namely
'technological unemployment: This means unemployment due to
our discovery of means of economizing the use of labor outrunning
the pace at which we can find new uses for labor."27
Trickle-dnwn Technology and Market Realities
25
By the 1930s, many mainstream economists were suggesting that
increased efficiency and rising productivity, brought on by laborsaving
technology, was only exacerbating the economic plight of every industrial nation.

…

Nearly
$46 out of every $100 of new capital went to the military economy.55
Even with the addition of a permanent military-industrial complex, the postwar boom was threatened by continued technological
unemployment in the 1950S and 1960s resulting from breakthroughs in
automation. New products-especially television and consumer
electronics-helped cushion the blow and provide jobs for workers
displaced by machines in other industries. The service sector also
grew significantly, in part to fill the vacuum left by millions of women
leaving the home to work in the economy. Government spending
continued to provide jobs as well, dampening the effect of technological unemployment. In 1929 government spending was only
12 percent of the gross national product. By 1975 total government
spending was more than 33.2 percent of the nation's GNP.56
The National Defense Highway Act of the 1950S, the most costly
public-works project in history, spawned a new highway and suburban
culture and opened up new employment opportunities in every region
of the country.

…

The Great Society programs in the 1960s provided jobs
for many of the nation's poor, again mitigating the negative impact of
rising productivity and growing technological unemployment. The
Cold War and the Vietnam War led to an accelerated flow of government dollars into defense industries, insuring an expanding economy
Trickle-down Technology and Market Realities
33
and employment for many who might otherwise have been displaced
by new technologies. Finally, by the mid-1970S more than 19 percent of
all u.s. workers had jobs in the public sector, making the government
the largest employer in the United States. 57
NEW REALITIES
The new economic realities of the coming century make it far less
likely that either the marketplace or public sector will once again be
able to rescue the economy from increasing technological unemployment and weakened consumer demand. Information and telecommunication technologies threaten a loss of tens of millions of jobs in
the years ahead and the steady decline of work in many industries and
employment categories.

Even more surprising is that in these models the operations of banks are not taken
into consideration, although they do look at microeconomic data pertaining to large
companies and households in aggregate.
This approach to macroeconomic theory is a relatively recent phenomenon and
coincidentally began being applied in the late 1970s. Prior to this period, work done by
prominent economists such as John Maynard Keynes, Irving Fisher, and Henry Calvert
Simons, focused profoundly on the way money was made. While the reasons for this
divergence in academic disciplines is the subject for a book in economic history, this
approach of using the EMH and the RET while subtracting the role of banking was the
primary reason why a number of economists did not see the crisis coming. Although debt
is so tied up with the monetary system, these theories and the economists who created
models based on them, believed that increased complexity led to better price discovery,
and thus considered debt to be vital to economic growth.

…

Short-term GDP21 growth can no longer be the primary objective of
governments.
Thus, as the definition of capitalism begins to involve the democratic state to a
greater degree, we should also use this opportunity to see how we can address the
problems of technological unemployment, education, productivity changes, inequality,
and ageism. One solution pathway could lie with helicopter money and universal basic
income.
Helicopter Drops and Universal Basic Income
Refresh your memory and think about the last time you heard these “keywords”:
technological unemployment, income inequality, stagnant wages, poverty, regulatory
gridlock. If you are a regular follower of the news, then the chances are that you may have
heard these terms almost on a weekly basis.
But these terms are large-scaling in nature and talk about multiple socioeconomic
or political issues.

…

It also investigates if these changes could offer sovereign
states a new way to produce money and looks at alternatives other than inflation and
interest rates to govern monetary policy. Finally, it reviews different scenarios of how this
new structure can be used to implement innovative policies, such as overt money finance
and universal basic income, which could help address issues such as income inequality
and technological unemployment that currently threaten most economies.
While the purpose of the book it to shed more light on the implications of the
widespread use of Blockchain technology, the growing diversity within the currency
space cannot be fully excluded from the discussion. As the blockchain gains more
traction in formal financial circles, its first manifestation in the form of Bitcoin is
increasingly being excluded from the dialogue.

pages: 443words: 98,113

The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay
by
Guy Standing

They include the income lenders gain from debt interest; income from ownership of ‘intellectual property’ (such as patents, copyright, brands and trademarks); capital gains on investments; ‘above normal’ company profits (when a firm has a dominant market position that allows it to charge high prices or dictate terms); income from government subsidies; and income of financial and other intermediaries derived from third-party transactions.
Classical economists derided rental income as unproductive and undeserved, and poured scorn on rentiers. John Maynard Keynes, the most influential economist of the mid-twentieth century, famously dismissed the rentier as ‘the functionless investor’ who gained income solely from ownership of capital, exploiting its ‘scarcity value’. He concluded in his epochal General Theory that, as capitalism spread,
it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital … [W]hilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital … I see, therefore, the rentier aspect of capitalism as a transitional phase which will disappear when it has done its work.2
Eighty years on, the rentier is anything but dead; rentiers have become the main beneficiaries of capitalism’s emerging income distribution system.

…

Some are utopian, such as the postcapitalism of Paul Mason, imagining an era of free information and information sharing.17 Some are decidedly dystopian, where the robots – or rather their owners – are in control and mass joblessness is coupled with a ‘panopticon’ state subjecting the proles to intrusive surveillance, medicalised therapy and brain control. The pessimists paint a ‘world without work’.18 With every technological revolution there is a scare that machines will cause ‘technological unemployment’. This time, the Jeremiahs seem a majority.
Fortunately, we are still in the early stages, when collective action can assert democratic control. Whether or not they will do so in the future, the technologies have not yet produced mass unemployment. Although measured unemployment is higher than a few decades ago, this must be seen in the context of population growth and globalisation, in which the world’s labour supply has more than tripled.

…

There is no need for threats; it is just part of the system.
So, while technology is not necessarily destroying jobs, it is helping to destroy the old income distribution system, creating a rental wedge between profits, which are growing and becoming more concentrated, and wages, which are falling and becoming more volatile and uncertain. The threat is technology-induced inequality, not technological unemployment.
THE SECOND GILDED AGE
Today, we are living in a Second Gilded Age – with one significant difference. In the first, which ended in the Great Crash of 1929, inequality grew sharply but wages on average rose as well. The Second Gilded Age has also involved growing inequality, but this time real wages on average have stagnated or fallen. Meanwhile, those relying on state benefits have fallen further behind, many pushed into homelessness, penury and dependency on inadequate private charity.

In a landmark paper, two economists at MIT, Eric Brynjolfsson and Andrew P. McAfee, wrote, “Many workers, in short, are losing the race against the machine.”3 The median worker, the average white-collar accountant, the MIT pair warn, should prepare to be replaced.
Academics have made such predictions before. When machines began taking over manufacturing tasks in the 1920s and 1930s, John Maynard Keynes sounded the alarm for a “new disease” he termed “technological unemployment,” which happens when jobs can’t be replaced as fast as they’re eliminated by automation.4 Keynes’s warning was blown off as hyperbolic when it didn’t prove out. But perhaps his theory was simply ninety years early. Since the end of the recession in June 2009, according to Brynjolfsson and McAfee, corporations have spent 26 percent more on technology and software but haven’t raised their payrolls at all.

Hoover and his cabinet opposed intervention, fearing that government “relief would itself become an instrument of patronage and the means of creating a totalitarian state,” as well as undermining American individualism and creating dependency.6 He at first attempted to stoke the economy by issuing optimistic statements that the economy would right itself. He requested, and was granted by Congress, corporate and personal tax cuts. Hoover also requested that unions hold the line on wage increase requests, that employers not cut their payrolls, and that state governors consider undertaking infrastructure projects.7 But Hoover was neither willing nor able to compel businesses to hire workers, nor states to spend money, and even the economist John Maynard Keynes had not, by Hoover’s term in office, fully developed his theory that government spending could “prime the pump” for economic recovery.8
Although businesses could not be compelled, workers could. Beginning in 1931, Hoover’s Secretary of Labor, William Doak, responded to unemployment by seeking out migrants without a legal immigration status through a series of government-sponsored raids on low-wage industries.

…

On the other hand, she advocated for black state directors of black NYA activities (although she tolerated the payment of disproportionately low salaries).39 Like McLeod Bethune, the New Deal adjusted to the South’s ongoing commitment to white supremacy.
BEYOND THE NEW DEAL
The New Deal was an experiment in the use of government tools to solve economic problems, but Roosevelt encountered pressure from more radical suggestions for redistribution of income. Some who called for change pointed to technological unemployment; in the modern economy, some lost jobs were just not coming back, as the tractor could do a job faster than the hoe. Others argued that economic growth was hindered by lack of economic distribution.40 For example, the philosopher John Dewey headed the People’s Lobby, one of many groups to argue that the Great Depression had been caused by underconsumption as workers could not afford to purchase consumer goods.

A world
without a United States might have permanently turned after 1945
against the Industrial Revolution, just as a world without Britain and
Holland would not have developed bourgeois dignity and liberty in the
first place.57
A deeper reply is that the turn to the left, and many of the turns to
the right, did in fact stop the Industrial Revolution, at any rate in the
places where anti-innovation was well and truly tried. To be sure, in
1945 it looked like market societies were exhausted, and that giving
socialism and the welfare state a serious trial even in the United States
was in the cards. The best economists, such as Joseph Schumpeter, Alvin
Hansen, John Maynard Keynes, Oskar Lange, Paul Samuelson, and Abba
Lerner, thought at the time — with greater or lesser pleasure at the
thought — that the world was moving from capitalism to socialism,
whether or not the embattled democracies survived. Many people were
impressed by the Soviet successes of the 1930s, whatever their human
costs, and were very impressed by Stalin’s victory over Hitler. They
could not see that in the longer run, when opportunities for imitation
had been used up, central-planning socialism could not achieve real
innovation.

…

All such denying of trade as the crucial engine of growth, though, is
not to say that the expansion foreign trade was literally a nullity. Some
goods — the banana for the Englishman’s breakfast table was the
popular instance late in the nineteenth century, raw cotton the most
important instance throughout — simply cannot be had in England’s
clime, short of hot houses. The regional economist Gerald Silverberg has
made the case to me for cotton as special because the technological
unemployment caused by its expansion was felt not by political
connected guildsmen at home but by the bleached bones of Indians
starving when their hand industry was replaced by Manchester.57 The
truth in Silverberg’s argument is that trades like porcelain and cotton
textiles in Britain could expand in country locations out of reach of the
nay-sayers in established guild towns like Norwich or London.